NIFTY RETREATS AFTER ACHIEVING 11225 TARGET; TRAIL STOP-LOSS TO 10895

NIFTY RETREATS AFTER ACHIEVING 11225 TARGET; TRAIL STOP-LOSS TO 10895

WORLD MARKETS

Dow and S & P 500 rose 0.6% each while Nasdaq gained 0.2%, as hopes of more fiscal stimulus and optimism about coronavirus vaccine overshadowed concerns about escalating US-China tensions.

The U.S. agreed to pay Pfizer and German-partner BioNTech $1.95 billion to produce 100 million coronavirus vaccines if it proves to be safe and effective.

Media reports suggested that Republicans are considering extending current unemployment benefits at $400 per month through December. Current unemployment benefit stands at $600 per week.

Stocks had started on a cautious note after the U.S. State Department abruptly ordered China to close its consulate in Houston. China warned of firm countermeasures if the U.S. does not reverse its decision.

Shares of Snap dropped 6% after the social media company reported fewer-than-expected daily active users. Shares of United Airlines dipped 4.2% after the company reported a net loss of $1.62 billion for the second quarter.

Brent crude fell 3 cents to settle at $44.29 per barrel while WTI settled 2 cents lower at $41.90 per barrel.

European markets fell 0.5%-1.3%.

AT HOME

Benchmark indices ended modestly lower after a choppy session, snapping 5-day winning streak. Sensex settled at 37871, down 58 points while Nifty lost 29 points to finish at 11132. BSE mid-cap index rose 0.2% while small-cap index fell 0.2%. BSE IT and Auto indices slipped 1.4% and 1.3% respectively, becoming top losers among the sectoral indices while Consumer Durables index soared 2.2%, becoming top gainer, followed by 1.2% higher Utilities and Power indices.

FIIs net bought stocks and index futures worth Rs 1666 cr and 337 cr respectively but net sold stock futures worth Rs 362 cr. DIIs were net sellers to the tune of Rs 1139 cr.

Rupee ended unchanged at 74.75/$.

L & T reported weaker-than-expected operational performance as EBIDTA fell 47% and margins contracted from 10.3% to 7.6%. Revenue fell 28% and order inflow fell 39%. Management commentary was also cautious.

Bajaj Auto's Q1 topline and bottomline were largely in-line with expectation while operating performance was a beat. Revenue fell 60% y-o-y to Rs 3079 cr, EBITDA fell 66% to Rs 408 cr, margin contracted 210 bps to 13.3% and profit fell 53% to Rs 528 cr.

OUTLOOK

Today, Nikkei is closed, Shanghai is flat while Hang Seng is up 1%. SGX Nifty is suggesting around 30 points higher start for our market.

Readers would recall that we had turned our view on Nifty bullish after 11894 was taken out and have been advising holding on to long positions with a trailing stop-loss.

In yesterday's report we had said that 11225 is the next upside target to eye.

Nifty, after touching a high of 11238 in the initial trade, slipped to end at 11132 and is set to open above 11150 today.

11238, the top made yesterday, also coincided with the upper end of the gap, created by gap-down opening on 6th March and hence is the immediate hurdle to eye. Above 11238, 11390, the top made on 5th March, would be the next target/hurdle.

Immediate support on the hourly chart has moved up to 10895, with the stop-loss of which, trading longs can be held on to.